NCAA and power conferences agree to settlement that will allow schools to pay student-athletes

The National Collegiate Athletic Association and the Power Five conferences have agreed to the settlement, paving the way for schools to be able to pay student-athletes, marking a significant moment ushering in a new era in college sports.

The NCAA, the governing body of college sports, and leaders of the Big Ten, Southeastern, Pac-12, Atlantic Coast and Big 12 conferences announced the agreement Thursday evening. According to multiple reports citing anonymous sources, the settlement settling three antitrust cases includes the payment of more than $2.7 billion in damages to former and current student-athletes.

ESPN sources say the sides have agreed to a revenue-sharing plan that will allow each school to share “approximately $20 million annually with its athletes.” All Division I athletes who have been playing since 2016 are eligible to receive a share. In return, athletes who receive participation cannot sue the NCAA for other potential antitrust violations and drop complaints in three antitrust cases – House v. NCAA, Hubbard v. NCAA and Carter v. NCAA, according to ESPN.

Reports indicate that Judge Claudia Wilken, who is presiding over the three antitrust cases, still needs to approve the terms of the settlement, which could take several months, and once approved, schools could begin sharing the revenue in fall 2025.

The settlement, if accepted by Wilken, would represent a turning point in college athletics, which has traditionally competed under the guise of amateurism, allowing a shady underbelly of hidden payments and salaries to flourish. The NCAA has punished many college programs for having their players compensated in some way for their on-field exploits, ranging from thousands of dollars paid to stars under the table to a coach buying a recruit a hamburger during a visit.

As the college business took off, the veil of amateurism began to seem absurd to many observers: schools and conferences began raking in millions of dollars, coaches preached frugality and amateurism before leaving their players to take huge raises, and television networks helped change the landscape of sports, to maximize your own profits. At the same time, the players on the field were not paid anything, even though they were the ones playing in the games in a multi-billion dollar industry.

The House of Representatives’ lawsuit against the NCAA sought to change this.

Filed by Grant House and Sedona Prince, two college athletes, against the NCAA and the Power Five conferences – Pac-12, Big Ten, Big 12, Southeastern and Atlantic Coast – the lawsuit focused on an eight-year, $8.8 billion extension The NCAA signed a contract to broadcast the March Madness basketball tournament and also sought backdated damages for payments the lawsuit said were wrongfully withheld.

Although the NCAA rule change allowed players to be paid for the use of their name, image and likeness, often in the form of sponsorships and advertising, the lawsuit argued that the NCAA limits how much student-athletes can earn outside of employment. For example, the lawsuit points out that one of the NCAA regulations governing the professions athletes can perform at their universities “specifically prohibits athletes from receiving any compensation for the value or utility the student-athlete may have to an (external) employer due to publicity.” , reputation, fame or personal sympathy that he has gained due to his sporting abilities.

Ohio State University Athletics posted a message from NCAA President Charlie Baker on its website Friday with details about the settlement. The NCAA told CNN that the message was sent to all Division I member schools.

“We were able to negotiate the total amount of retroactive damages in these cases to nearly $2.78 billion, to be paid over 10 years, equating to approximately $280 million annually,” Baker’s statement read.

“To meet this obligation, we have developed a plan under which the NCAA will contribute $1.2 billion over 10 years, representing 42% of total retroactive compensation. The remaining 58% will be distributed among Division I conferences based on their distribution over the past nine years,” Baker’s statement continued. “This translates into an annual contribution of $165 million, or a total reduction in payouts of 20%.”

In a joint statement, leaders of the five conferences and the NCAA said they hoped the agreement would be an important moment in the reform of college sports.

“This agreement also serves as a road map for college athletic leaders and Congress to ensure that this uniquely American institution can continue to provide unparalleled opportunities to millions of students. The entire Division I made today’s progress possible, and we all have work to do to implement the terms of the agreement as the legal process continues. We look forward to working with our diverse student-athlete leadership groups to write the next chapter in college sports,” read the statement, which was attributed to Baker, ACC commissioner Jim Phillips, Big Ten commissioner Tony Petitti, Big 12 commissioner Brett Yormark, Pac-12 Commissioner Teresa Gould and SEC Commissioner Greg Sankey.

While it is unclear what immediate impact the settlement will have on college sports, it has been clear for some time that a reckoning is coming – particularly as the NIL compensation regulations change in 2021.

The rule change, combined with the relaxation of transfer rules, has led to players jumping from school to school in search of a better NIL offer, whereas in the past they were forced to stay at their original school for four years of eligibility or risk sitting out for a year after transferring.

Commissioners said athletes’ increased use of the transfer portal has become problematic in college sports, especially as student-athletes strive to earn a degree. They said college boosters have taken advantage of the current patchwork of regulations to help their universities recruit top athletes by promising big payouts — to the detriment of colleges in other states, which are forced to play by a different set of rules.

The lack of NIL regulations has created a Wild West atmosphere in college sports that the NCAA will now hope to somehow curb.

The reported revenue-sharing plan could help smaller schools that may not have wealthy NIL collectives maintain a more level playing field compared to high-profile schools that do.

This story has been updated with additional reporting.

CNN’s Ben Morse contributed to this report

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